Municipal Bond

A municipal bond is a debt security issued by a local government body—such as a city, state, or municipal corporation—to raise capital for public infrastructure projects like roads, water supply, sewage systems, schools, and hospitals. In India, SEBI has enabled urban local bodies to issue bonds in the capital market, and several municipal corporations—including Pune, Hyderabad, Ahmedabad, and Indore—have issued bonds in recent years. Municipal bonds in India are not automatically tax-exempt (unlike in the US) but may offer attractive yields with government backing. They are an emerging asset class offering investors exposure to India's urban infrastructure development story.